Neptune-Calculus Income & Growth Regulatory News (NEP)

18 Sep 2006 17:15

Neptune-Calculus Income &Growth VCT18 September 2006 Interim Results for the six months ended 30 June 2006 Performance summary Ordinary Shares C Shares 6 months to Period to 30 June 2006 30 June 2006 Revenue return per share 0.82p 0.43pNet asset value per share 104.60p 92.05p As at As at 14 September 2006 14 September 2006 Net asset value per share 106.08p 94.49p Being the latest practicable date prior to publication and excluding net revenueafter 30 June 2006 Corporate policy The Neptune-Calculus Income and Growth VCT is a generalist VCT which has theobjective of providing investors with both capital growth and income. It is intended that approximately 75 per cent. of the funds raised will beinvested over a three year period in a diversified portfolio of holdings inqualifying investments including AIM companies. The Company does not invest instart-up and seed capital situations. The balance of the Company's investmentswill be invested in a combination of Neptune income funds and a portfolio ofsimilar income generating UK listed shares and money market instruments. Managers Qualifying investments are managed by Calculus Capital Limited andnon-qualifying investments are managed by Neptune Investment Management Limited. Chairman's Statement I am delighted to present our interim results for the Company for the six monthsended 30 June 2006 and I am pleased to report that there has been good progressin the period. During the period, the Company undertook a successful fundraising of C OrdinaryShares (the "C Share Fund") which raised £8.4 million before costs of £457,000.The fundraising, which closed on 5th April 2006, will enable growth anddiversification of the Company's investment portfolio and create greatereconomies of scale for all shareholders. The C Share Fund will be managed andinvested as a separate pool of funds until April 2009 when both classes will bemerged at their respective net asset values. Until that time, we are required toreport separately on the performance of each class of shares. The C Share Fund is being invested following a similar investment strategy tothe funds raised by the issue of Ordinary shares (the "Ordinary Share Fund")last year. In our prospectus, we stated our intention to be a generalist VCTcompany investing in a diversified portfolio of unquoted companies in the UKincluding AIM stocks. The objective is to avoid investing in companies where therisk profile is unacceptably high or where the prospective time to realisationis unacceptably long. The aim is to provide shareholders with both long termcapital growth and income. Initially, all the funds raised are invested in theNeptune Income Fund, the Neptune Quarterly Income Fund, a portfolio of incomeorientated stocks and other cash holdings pending investment in VCT qualifyinginvestments. At the end of the investment process, approximately 25 per cent. ofthe funds will remain invested in the Neptune funds. Initially, any income is likely to come from the funds invested in non-VCTqualifying investments managed by Neptune. In the longer term, returns areexpected to be derived from the underlying capital growth of the portfolio ofVCT qualifying investments managed by Calculus Capital and dividends will bepaid out of capital profits realised. A report from each of the Investment Managers is given below. As you may be aware, the Ordinary Share Fund is required to have invested atleast 70 per cent of its funds in VCT qualifying investments by 31 December 2007and the C Share Fund at least 70 per cent. of its funds by 31 December 2008.At 30 June 2006, the respective percentages were 26.53 per cent. and 9.66 percent. The Board continues to monitor progress towards meeting H M Revenue &Customs requirements and remains confident of achieving the requiredpercentages. Total income attributable to the Ordinary Share Fund for the period was £68,000and total income attributable to the C Share Fund was £72,000. This was largelyderived from interest on uninvested funds and from dividends from holdings inthe Neptune Income Fund, the Neptune Quarterly Income Fund, a portfolio ofincome orientated quoted equities and other liquid holdings. In the period to 30 June 2006, a further £815,000 was invested in 6 qualifyinginvestments on behalf of the Ordinary Share Fund and one investment, DebtmattersGroup plc, was partially realised, achieving a return to date on initial cost of241 per cent. In the same period, £780,000 was invested in 3 investments onbehalf of the C Share Fund. The net asset value per share (NAV) for the Ordinary Share Fund at 30 June 2006was 104.60 pence. Since 31 December 2005, the NAV of the Ordinary Share Fundhas increased by 2.84 per cent. from 101.71 pence per share. Since the listingof the Ordinary shares in February 2005, the NAV has increased by 10.69 per cent.whilst the FTSE AIM All Share Index has gone down by 1.3 per cent. The NAV for the C Share Fund at 30 June 2006 was 92.05 pence. The Board is declaring an interim dividend in respect of the Ordinary shares of0.8 pence per share and the Directors also envisage recommending a finaldividend when they announce the Company's full year results. The interimdividend is payable on 20 October 2006 to Ordinary shareholders on the registeron 29 September 2006. As the C Share Fund fundraising only closed on 5th April,the Board is not recommending an interim dividend to C Share Fund Shareholdersas it concluded that it would not be cost effective. As you may be aware, the share premium account attributable to the OrdinaryShare Fund was cancelled last year. The cancellation of the share premiumaccount attributable to the C Share Fund has now been confirmed and registeredby the Registrar of Companies. The cancellation of the share premium accountcreates a special reserve that can be used, amongst other things, to fundbuy-backs of the Company's shares when the Directors consider that it is in thebest interests of the Company to do so. The Investment Managers are continuing to see a healthy pipeline of investmentopportunities. The Board is confident that the combination of identifyingqualifying investments in well managed companies led by entrepreneurs who havethe ability to build strong businesses and investment in the Neptune incomefunds will provide an attractive return for investors. We look forward to reporting further progress when we publish our accounts forthe year ending 31 December 2006 in March 2007. Meanwhile I would like, onbehalf of the Board, to thank all shareholders for their continuing support. Philip StephensChairman18 September 2006 Investment Managers' Reviews Investment Manager (Qualifying investments) Calculus Capital Limited advises the Company in respect of qualifyingInvestments made by the Company. The deal flow of potential VCT qualifying investments remains strong. In linewith our patient and risk averse approach, we will only invest in qualifyingcompanies when we are confident we have found the right investmentopportunities. We have set out below a review of the Ordinary Share Fund'squalifying investment portfolio, including details of new investments, and thengive an equivalent review of the C Share Fund's qualifying investment portfolio. Review of the Ordinary Share Fund qualifying investment portfolio As at 30 June 2006, the Ordinary Share Fund portfolio comprised investmentsin nine companies. During the period, we took advantage of the appreciation inthe share price to sell the majority of our holding in Debtmatters plc. Six newinvestments were made during the period. Cagney Plc Cagney was incorporated with an experienced management team to acquire marketingservices businesses as part of a broad based strategy of becoming a fullyintegrated marketing services group, principally servicing the UK domesticmarket. The first acquisitions cover businesses in the following sectors:promotional marketing, PR consultancy, brand consultancy and advertising. TheVCT subscribed as part of Cagney's initial public offering on AIM. The financewas raised to part fund the first acquisitions. Croma Group Plc Croma designs, manufactures and supplies surveillance and defence relatedproducts to the UK, the Ministry of Defence, the armed forces, governmentagencies, the police, customs and coastguard and similar organisations. Thechanging nature of "conflict" presents an opportunity for Croma. The distinctionbetween warfare, anti-terrorism and drug enforcement measures is blurring sothat the potential market covers anti-guerrilla warfare, urban terrorism,surveillance, border and customs security, drug surveillance, large scale assetprotection (e.g. oil fields, pipelines, nuclear plants), and search and rescue.The VCT participated in a fundraising to finance the acquisition of Vigilant, aspecialist asset protection company, and Photobase, a designer of biometricidentification products. Interactive World Plc Interactive World sells digital media content to mobile telephone customers. Itdoes not create its own content but has a number of relationships with contentproviders. The market for content and services for mobile phone users has grownrapidly, driven by increasing numbers of mobile phones which enable connectionto the internet. The VCT subscribed for shares at the time of InteractiveWorld's initial public offering on AIM. The initial public offering wasundertaken to provide additional working capital and a platform for futuregrowth. Quintus Management Holdings Limited Quintus has three main areas of activity: ownership and management of sportingand entertainment events, sports marketing consultancy and provision of 3Dadvertising signage for sports events. Quintus' portfolio of events includes theBlackRock Masters Tennis at the Royal Albert Hall, the Marsh Classic at theHurlingham Club and the London Bierfest. Quintus also owns a series of triathlonevents including the London Triathlon, which is the world's largest, andChallenger World, a series of team-building events for corporates in the UK,Europe and USA. Quintus is unquoted and the investment by the VCT was to provideadditional working capital. Debts.co.uk plc Debts.co.uk, through its subsidiaries, provides a range of solutions, includingIndividual Voluntary Arrangements (IVAs), debt management programmes and securedloans or second mortgages to over-indebted individuals. The Group is alsoplanning to introduce mortgage broking services in 2007. The UK's total consumerdebt rose past £1 trillion in 2004 and as of February 2006 stood atapproximately £1.174 trillion, an increase of 10.3 percent over the previous 12months. Of this, approximately £192.6 billion was consumer credit not securedover dwellings, an increase of 8.7 per cent over the previous 12 months. The VCTsubscribed for shares in Debts.co.uk's initial public offering on AIM which wasundertaken to provide additional working capital. Worthington Nicholls Group Plc Worthington Nicholls is one of the UK's leading suppliers of air conditioningsystems' design, installation and maintenance services. The company believes itis the leading supplier to the hotel industries in the UK and is developing itsservices to the retail sector. The UK market for new air conditioning units wasestimated at £650 million in 2005. The VCT subscribed for shares in WorthingtonNicholls' initial public offering which was undertaken to provide additionalworking capital and a platform for future growth. The combined cost of these six investments was £815,000 and the market value asat 30 June 2006 was £787,000. As at 30 June 2006, £1,097,467 had been invested in qualifying holdings and theOrdinary Share Fund's qualifying investment portfolio is at an investment levelof 26.53 per cent. A full list of the Ordinary Share Fund's portfolio of qualifying investmentsas at 30 June 2006 is set out below. +-----------------------------+----------+------------------+| | Cost| Valuation|| | £| £|+-----------------------------+----------+------------------+|Debtmatters Group plc | 11,700| 61,740|+-----------------------------+----------+------------------+|PharmaSmart Limited | 50,000| 50,000|+-----------------------------+----------+------------------+|PharmaSmart Limited loan | 75,000| 75,000||stock | | |+-----------------------------+----------+------------------+|Cellcast plc | 145,753| 41,057|+-----------------------------+----------+------------------+|Cagney Plc | 125,000| 105,469|+-----------------------------+----------+------------------+|Croma Group Plc | 125,000| 93,750|+-----------------------------+----------+------------------+|Interactive World Plc | 145,000| 162,877|+-----------------------------+----------+------------------+|Quintus Management Holdings | 150,013| 150,013||Limited | | |+-----------------------------+----------+------------------+|Debts.co.uk plc | 120,001| 124,667|+-----------------------------+----------+------------------+|Worthington Nicholls Group | 150,000| 150,000||Plc | | |+-----------------------------+----------+------------------+ All valuations are at AIM bid price with the exceptions of PharmaSmart Limitedand Quintus Management Holdings Limited which are unquoted holdings valued atcost. Review of the C Share Fund's qualifying investment portfolio The C Share Fund fundraising closed for subscriptions on 5 April 2006. As at30 June 2006, the C Share Fund's qualifying investment portfolio comprised threeinvestments made during the period. These were Interactive World Plc, QuintusManagement Holdings Limited and Worthington Nicholls Group Plc, which arediscussed under the review of the Ordinary Share Fund's qualifying investmentportfolio above. No disposals of investments were made during the period. The combined cost of these three investments was £780,000 and the market valueas at 30 June 2006 was £802,000. The C Share Fund's qualifying investment portfolio is at an investment level of9.66 per cent. A full list of the C Share Fund's portfolio of qualifying investmentsis set out below. +------------------------+------------------+------------------+| | Cost| Valuation|| | £| £ |+------------------------+------------------+------------------+|Interactive World Plc | 180,000| 202,192|+------------------------+------------------+------------------+|Quintus Management Holdings Limited | 250,000| 250,000|+------------------------+------------------+------------------+|Worthington Nicholls | 350,000| 350,000||Group Plc | | |+------------------------+------------------+------------------+ Interactive World Plc and Worthington Nicholls Group Plc are valued at AIM bidprice. Quintus Management Holdindg Limited, which is unquoted, is valued atcost. Developments since the period end Since the period end, the Company has committed to invest a further £10,000 inCellcast plc for the Ordinary Share Fund, pursuant to a placing of new ordinaryshares in Cellcast plc conditional on the admission of these shares to tradingon AIM. Outlook The Manager continues to see a healthy pipeline of qualifying unquoted and AIMcompanies raising funds at reasonable valuations. The Company is building adiversified portfolio of good quality qualifying investments which the Managerbelieves will deliver sustained long term performance in due course. John GlencrossCalculus Capital Limited18 September 2006 Investment manager (non-qualifying investments) Portfolio developments Neptune invests in four separate portfolios on behalf of the Company. These arethe Neptune Income Fund, the Neptune Quarterly Income Fund and two segregatedportfolios which broadly follow the aforementioned Funds. Towards the end of last year we began moving the Funds and portfolios out ofFTSE 250 stocks and increasingly into the FTSE 100. This is where we foresaw thebest value in 2006 and it was also crucial positioning during the marketsell-off that began in May 2006. Over the first half of the year, we have seen anumber of our holdings at the lower end of the FTSE 100 being undervalued andsubject to takeover bids, including BOC and BAA. This has boosted theperformance of the portfolios over a difficult period. In the six months to 30 June 2006, despite market volatility in the secondquarter of 2006, the Income Fund outperformed its benchmark, the FTSE All-Share,returning 6.5 per cent. against the benchmark return of 6.1 per cent. and theQuarterly Income Fund returned 5.7 per cent.. Both the Income Fund and theQuarterly Income Fund outperformed their peer group, the IMA UK Equity IncomeSector, which returned an average of 5.2 per cent., placing both Fundscomfortably inside the top half of their peer group. Under recent market conditions, the Funds have benefited from having no exposureto the metals and mining sectors, or to any tech stocks. We have taken profitsfrom our previous utilities weighting and now have our lowest weighting in thatsector. We believe that the consumer sectors are currently the most undervaluedand therefore we have taken a heavier weighting in these areas. Outlook There are good yields attainable on quality companies in the FTSE 100, so we donot see merit in investing heavily in mid cap companies. We expect afourth quarter recovery in the market led by large caps and we are wellpositioned to benefit from this. Performance figures sourced from Lipper; based in Sterling; net incomereinvested. Robin GeffenNeptune Investment Management Limited18 September 2006 Investment Portfolio Ordinary Share Fund portfolio The ten largest holdings by value are included below: As at 30 June 2006 Cost Valuation Percentage of portfolio £ £ %AIM investments (quoted equity)Interactive World Plc 145,000 162,877 4.30Worthington Nicholls Group Plc 150,000 150,000 3.96Debts.co.uk plc 120,001 124,667 3.29Cagney Plc 125,000 105,469 2.79Croma Group Plc 125,000 93,750 2.48Other AIM investments 157,453 102,797 2.71 Unquoted equity investmentsQuintus Management Holdings Limited 150,013 150,013 3.96Other unquoted investments 50,000 50,000 1.32 Unquoted bondPharmaSmart loan stock 75,000 75,000 1.98 Total qualifying investments 1,097,467 1,014,573 26.79 Quoted funds Capita Financial Managers CF Neptune 520,000 616,980 16.29Neptune Investment Management Income A 520,000 615,905 16.26Shares Quoted equityDrax Group PLC 50,319 66,582 1.76Other quoted equity 1,455,176 1,472,901 38.90 Total non-qualifying investments 2,545,495 2,772,368 73.21 Total investments 3,642,962 3,786,941 100.00 Investment Portfolio C Share Fund portfolio The ten largest holdings by value are included below: As at 30 June 2006 Cost Valuation Percentage of portfolio £ £ %AIM investments (quoted equity)Worthington Nicholls Group plc 350,000 350,000 4.77Interactive World Plc 180,000 202,192 2.76 Unquoted equity investmentsQuintus Management Holdings Limited 249,991 249,991 3.41Total qualifying investments 779,991 802,183 10.94 Quoted fundsNeptune Investment Management Income A 825,000 802,111 10.94SharesCapita Financial Managers CF Neptune 810,000 769,160 10.49Quoted equity BT Group PLC 131,077 145,943 1.99Other quoted equity 3,772,062 3,610,774 49.22 Unquoted fundsGoldman Sachs Sterling Liquid Reserve 302,633 302,633 4.12FundFidelity Sterling Fund distributing 302,463 302,463 4.12shares class ABGI Liquidity First Fund 300,000 300,000 4.09SWIP Global Liquidity Fund Sterling 300,000 300,000 4.09sub Fund Total non-qualifying investments 6,743,235 6,533,084 89.06 Total investments 7,523,226 7,335,267 100.00 Unaudited Income Statementfor the six months to 30 June 2006 Ordinary Share Fund Six months to 30 June 2006 Period to 30 June 2005* Period to 31 December 2005* Note Revenue Capital Total Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Gains on - 112 112 - 8 8 - 303 303investmentsat fair value Investment 48 - 48 16 - 16 18 - 18income Other 20 - 20 37 - 37 86 - 86income Investment (11) (33) (44) - - - (11) (33) (44)managementfee Other (26) - (26) (24) - (24) (80) - (80)expenses Return on ordinary 31 79 110 29 8 37 13 270 283activities beforetaxation Taxation on - - - (2) - (2) - - -ordinaryactivities Return 31 79 110 27 8 35 13 270 283attributable toequity shareholders Return per 4 0.82p 2.07p 2.89p 1.10p 0.33p 1.43p 0.41p 8.49p 8.90pordinaryshare Notes The total column of this statement is the profit and loss account of theCompany. All revenue and capital items in the above statement derive from continuingoperations. No operations were acquired or discontinued in the period. * The Company was incorporated on 30 November 2004 and commenced investing on 22June 2005. The notes below form part of these accounts. Unaudited Income Statementfor the period to 30 June 2006 C Share Fund Note Revenue Capital Total £'000 £'000 £'000 Losses on investments - (202) (202)at fair valueInvestment Income 39 - 39Other income 33 - 33Investment management (12) (35) (47)feeOther expenses (33) - (33) Return on ordinary activities 27 (237) (210)before taxation Taxation on ordinary - - -activities Return attributable to 27 (237) (210)equity shareholders Return per C share 4 0.43p (3.84p) (3.41p) Notes The total column of this statement is the profit and loss account of theCompany. All revenue and capital items in the above statement derive from continuingoperations. No operations were acquired or discontinued in the period. The first allotment of C shares took place on 8 February 2006. See note 5. The notes below form part of these accounts. Unaudited Income Statementfor the six months to 30 June 2006 Total Six months to 30 June 2006 Period to 30 June 2005* Period to 31 December 2005* Revenue Capital Total Revenue Capital Total Revenue Capital Total £000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 (Losses)/gains on investments at fair value - (90) (90) - 8 8 - 303 303 Investment income 87 - 87 16 - 16 18 - 18 Other income 53 - 53 37 - 37 86 - 86 Investment management fee (23) (68) (91) - - - (11) (33) (44) Other expenses (59) - (59) (24) - (24) (80) - (80) Return on ordinary activitiesbefore taxation 58 (158) (100) 29 8 37 13 270 283 Taxation on ordinary activities - - - (2) - (2) - - - Return attributable toequity shareholders 58 (158) (100) 27 8 35 13 270 283 Notes The total column of this statement is the profit and loss account of theCompany. All revenue and capital items in the above statement derive from continuingoperations. No operations were acquired or discontinued in the period. * The Company was incorporated on 30 November 2004 and commenced investing on 22June 2005. The notes below form part of these accounts. Unaudited Reconciliation of Movements in Shareholders'Funds for the six months to 30 June 2006 Ordinary Share Fund Share Share Special Capital Revenue Total capital premium reserve reserve reserve £'000 £'000 £'000 £'000 £'000 £'000For the period 1 January 2006 to 30 June 20061 January 2006 379 21 3,187 270 1 3,858Net return after taxation for the - - - 79 31 110periodDividends paid - - - - - -30 June 2006 379 21 3,187 349 32 3,968 For the period 30 November 2004 to 30 June 200530 November 2004 - - - - - -Issue of shares 377 - - - - 377Premium on issue of shares - 3,392 - - - 3,392Expenses of share issue - (205) - - - (205)Net return after taxation for the - - - 8 27 35periodDividends paid - - - - - -30 June 2005 377 3,187 - 8 27 3,599 For the period 30 November 2004 to 31 December 200530 November 2004 - - - - - -Issue of shares 379 - - - - 379Premium on issue of shares - 3,413 - - - 3,413Expenses of share issue - (205) - - - (205)Transfer to special reserve - (3,187) 3,187 - - -Net return after taxation for the - - - 270 13 283periodDividends paid - - - - (12) (12)31 December 2005 379 21 3,187 270 1 3,858 The notes below form part of these accounts. Unaudited Reconciliation of Movements in Shareholders' Fundsfor the period to 30 June 2006 C Share Fund Share Share Special Capital Revenue Total capital premium reserve reserve reserve £'000 £'000 £'000 £'000 £'000 £'000 For the period 8 February 2006 to 30June 20068 February 2006 - - - - - -Issue of shares 839 - - - - 839Premium on issue of shares - 7,554 - - - 7,554Expenses of share issue - (457) - - - (457)Net return after taxation for the period - - - (237) 27 ( 210)Dividends paid - - - - - -30 June 2006 839 7,097 - (237) 27 7,726 The notes below form part of these accounts. Unaudited Reconciliation of Movements in Shareholders'Funds for the six months to 30 June 2006 Total Share Share Special Capital Revenue Total capital premium reserve reserve reserve £'000 £'000 £'000 £'000 £'000 £'000For the period 1 January 2006 to 30 June 20061 January 2006 379 21 3,187 270 1 3,858Issue of shares 839 - - - - 839Premium on issue of shares - 7,554 - - - 7,554Expenses of share issue - (457) - - - (457)Net return after taxation for the - - - (158) 58 (100)periodDividends paid - - - - - - 30 June 2006 1,218 7,118 3,187 112 59 11,694 For the period 30 November 2004 to 30 June 200530 November 2004 - - - - - -Issue of shares 377 - - - - 377Premium on issue of shares - 3,392 - - - 3,392Expenses of share issue - (205) - - - (205)Net return after taxation for the - - - 8 27 35periodDividends paid - - - - - -30 June 2005 377 3,187 - 8 27 3,599 For the period 30 November 2004 to 31 December 200530 November 2004 - - - - - -Issue of shares 379 - - - - 379Premium on issue of shares - 3,413 - - - 3,413Expenses of share issue - (205) - - - (205)Transfer to special reserve - (3,187) 3,187 - - -Net return after taxation for the - - - 270 13 283periodDividends paid - - - - (12) (12)31 December 2005 379 21 3,187 270 1 3,858 The notes below form part of these accounts. Unaudited Balance Sheetas at 30 June 2006 Ordinary Share Fund 30 June 2006 30 June 2005 31 December 2005 Note £'000 £'000 £'000Fixed Assets Investments at fair value 3,787 588 1,739 Current Assets Debtors 61 28 95Cash at bank 220 3,030 2,208 281 3,058 2,303 Creditors: Amounts falling duewithin one year Creditors (100) (47) (184) Net Current Assets 181 3,011 2,119 Net Assets 3,968 3,599 3,858 Represented by: CALLED UP SHARE CAPITAL AND RESERVES Share capital 5 379 377 379Share premium 21 3,187 21Special reserve 3,187 - 3,187Capital reserve realised 205 - (33)Capital reserve unrealised 144 8 303Revenue reserve 32 27 1 Total equity shareholders' funds 3,968 3,599 3,858 Net asset value per Ordinary share 6 104.60p 95.50p 101.71p The notes below form part of these accounts. Unaudited Balance Sheetas at 30 June 2006 C Share Fund 30 June 2006 Note £'000Fixed Assets Investments at fair value 7,335 Current Assets Debtors 138Cash at bank 560 698 Creditors: Amounts falling duewithin one year Creditors (307) Net Current Assets 391 Net Assets 7,726 Represented by: CALLED UP SHARE CAPITAL AND RESERVES Share capital 5 839Share premium 7,097Special reserve -Capital reserve realised (49)Capital reserve unrealised (188)Revenue reserve 27 Total equity shareholders' funds 7,726 Net asset value per C share 6 92.05p The notes below form part of these accounts. Unaudited Balance Sheetas at 30 June 2006 Total 30 June 2006 30 June 2005 31 December 2005 Note £'000 £'000 £'000Fixed Assets Investments at fair value 11,122 588 1,739 Current Assets Debtors 199 28 95Cash at bank 780 3,030 2,208 979 3,058 2,303 Creditors: Amounts falling duewithin one year Creditors (407) (47) (184) Net Current Assets 572 3,011 2,119 Net Assets 11,694 3,599 3,858 Represented by: CALLED UP SHARE CAPITAL AND RESERVES Share capital 5 1,218 377 379Share premium 7,118 3,187 21Special reserve 3,187 - 3,187Capital reserve realised 156 - (33)Capital reserve unrealised (44) 8 303Revenue reserve 59 27 1 Total equity shareholders' funds 11,694 3,599 3,858 The notes below form part of these accounts. Unaudited Cash Flow Statementfor the six months to 30 June 2006 Ordinary Share Fund Six months to Period to Period to 30 June 2006 30 June 2005 31 December 2005 £'000 £'000 £'000 Operating activitiesInvestment income received 38 - 16Deposit interest received 21 31 86Investment management fees paid (66) - -Administration fees paid (3) - -Other cash payments (40) (15) (49)Net cash (outflow)/inflow from operating activities (50) 16 53 Investing activitiesPurchase of investments (2,323) (580) (1,436)Sale of investments 386 - -Net cash outflow from investing activities (1,937) (580) (1,436) FinancingEquity dividends paid - - (12)Proceeds of share issue - 3,769 3,792Cost of share issue (1) (175) (189)Net cash (outflow)/inflow from financing (1) 3,594 3,591(Decrease)/increase in cash (1,988) 3,030 2,208 The notes below form part of these accounts. Unaudited Cash Flow Statementfor the period to 30 June 2006 C Share Fund Period to 30 June 2006 £'000 Operating activitiesInvestment income received 22Deposit interest received 33Investment management fees paid -Other cash payments (19)Net cash inflow from operating activities 36 Investing activitiesPurchase of investments (7,537)Sale of investments -Net cash outflow from investing activities (7,537) FinancingEquity dividends paid -Proceeds of share issue 8,393Cost of share issue (332)Net cash inflow from financing 8,061Increase in cash 560 The notes below form part of these accounts. Unaudited Cash Flow Statementfor the six months to 30 June 2006 Total Six months to Period to Period to 30 June 2006 30 June 2005 31 December 2005 £'000 £'000 £'000Operating activitiesInvestment income received 60 - 16Deposit interest received 54 31 86Investment management fees paid (66) - -Administration fees paid (3) - -Other cash payments (59) ( 15) (49)Net cash (outflow)/inflow from operating activities (14) 16 53 Investing activitiesPurchase of investments (9,860) (580) (1,436)Sale of investments 386 - - Net cash outflow from investing activities (9,474) (580) (1,436) FinancingEquity dividends paid - - (12)Proceeds of share issue 8,393 3,769 3,792Cost of share issue (333) (175) (189)Net cash inflow from financing 8,060 3,594 3,591(Decrease)/increase in cash (1,428) 3,030 2,208 The notes below form part of these accounts. Notes to the Financial Statements 1 Nature of Financial Information The unaudited interim financial information does not constitute statutoryfinancial statements as defined in Section 240 of the Companies Act 1985.This information has been prepared on the basis of the accounting policies usedin the statutory financial statements of the Company for the period ended31 December 2005, with the exception of the changes stated below. The statutoryfinancial statements for the period ended 31 December 2005, which contained anunqualified auditors' report, have been lodged with the Registrar of Companiesand did not contain a statement under either Section 237(2) or Section 237(3) ofthe Companies Act 1985. 2 Changes in accounting Policies This Interim Report has been prepared using new accounting standards that havebeen issued to begin the process of converging UK standards with InternationalFinancial Reporting Standards ("IFRS") and are in compliance with the Statementof Recommended Practice ("SORP") regarding Investment Trust Companies issued inJanuary 2003 (revised December 2005). The changes in accounting standards andthe revised SORP have had no effect on the net asset values or comparativefigures of the Company. With effect from 1 January 2006 the Company has adopted the following FinancialReporting Standards ("FRS"): FRS 21 Events after the balance sheet date Dividends payable to shareholders are recognised as a liability in the period inwhich they are paid or approved in general meetings. Previously, dividends paidby the Company were accounted for in the period in which the dividend had beendeclared. FRS 25 Financial Instruments: Disclosure and Presentation andFRS 26 Financial Instruments: Measurement All investments held by the Company are classified as 'fair value through profitor loss'. For investments actively traded in organised financial markets, fairvalue is generally determined by reference to Stock Exchange quoted market bidprices at the close of business on the balance sheet date. Although not arequirement until now, the Company had previously valued its investments at bidvalue to be consistent with the basis of valuation required in its financial statements for the year ending 31 December 2006. 3 Dividends The directors have declared an interim dividend of 0.8 pence per Ordinary sharepayable on 20 October 2006 to Ordinary shareholders on the register on 29September 2006. No dividend has been declared on the C shares. 4 Return per share Six months to 30 June Period to 30 June Period to 31 December 2006 2005 2005 Revenue Capital Total Revenue Capital Total Revenue Capital Total pence pence pence pence pence pence pence pence pence Ordinary 0.82 2.07 2.89 1.10 0.33 1.43 0.41 8.49 8.90sharesC shares 0.43 (3.84) (3.41) - - - - - - Ordinary shares Revenue return per ordinary share is based on the net revenue on ordinaryactivities attributable to the Ordinary shares of £31,000 (30 June 2005:£27,000, 31 December 2005: £13,000) and on 3,793,562(30 June 2005: 2,436,529, 31December 2005: 3,177,455) Ordinary shares, being the weighted average number ofOrdinary shares in issue during the period. Capital return per ordinary share is based on the net capital gain for theperiod of £79,000 (30 June 2005: £8,000, 31 December 2005: £ 270,000) and on3,793,562 (30 June 2005: 2,436,529, 31 December 2005: 3,177,455)Ordinary shares, being the weighted average number of Ordinary shares in issueduring the period. C shares Revenue return per C share is based on the net revenue on ordinary activitiesattributable to the C shares of £27,000 and on 6,162,283 C shares, being theweighted average number of C shares in issue during the period. Capital return per C share is based on the net capital loss for the period of£237,000 and on 6,162,283 C shares, being the weighted average number of Cshares in issue during the period. 5 Called up share capital 30 June 2006 £'000 Authorised:50,000,000 Ordinary shares of 10p each 5,00015,000,000 C shares of 10p each 1,500Alloted, issued and fully paid:3,793,562 Ordinary shares of 10p each 3798,393,209 C shares of 10p each 839 During the period 8,393,209 C shares of10p each were allotted between 8 February and 5 April 2006. 6 Net asset value per share 30 June 2006 30 June 2005 31 December 2005 pence pence pence Ordinary shares 104.60 95.50 101.71of 10p eachC shares 92.05 - -of 10p each The basic net asset value per Ordinary share is based on net assets (includingcurrent period revenue) of £3,968,000 (30 June 2005: £3,599,000, 31 December2005: £ 3,858,000) and on 3,793,562 (30 June 2005: 3,768,562, 31 December 2005:3,793,562 Ordinary shares, being the number of shares in issue at the end ofthe period. The basic net asset value per C share is based on net assets (including currentperiod revenue) of £7,726,000 and on 8,393,209 C shares, being the number ofshares in issue at the end of the period. 7 Copies of the interim report Copies of the interim report are being posted to shareholders and areavailable from the registered office of the Company at 11 Lees Place, LondonW1K 6LN This information is provided by RNS The company news service from the London Stock Exchange